29 Nov

10% Air Passenger Duty Rise will Damage UK Jobs and Growth

Ignoring calls from industry and MPs, the Chancellor’s Autumn Statement confirms that the Government’s flight tax (APD) – imposed on anyone flying from the UK - will rise by an eye-watering 10% in April 2012 as the UK’s growth forecast was cut to just 0.7%.  The Chancellor also announced the tax would be introduced on business jets, replacing the shortfall from it being cut in Northern Ireland.

The increase comes at a time when figures from the CAA indicate that in 2010 there were 7.4million fewer UK passengers passing through UK airports than the previous year, while numbers using European airports grew by 66.3 million, suggesting that the low UK growth is not simply fuelled by the economic downturn. In a further signal that APD is having a damaging impact on the British economy, the Office of Budget Responsibility, the Treasury’s spending watchdog, cut the projections for APD income by £200 million in 2015/16, making clear the perverse and contradictory impact this tax is actually having. This is supported by recent ABTA research that revealed 43% of passengers say that high taxes would put them off flying.

Mark Tanzer, CEO ABTA said: “At a time when the UK economy needs jobs and growth, hiking taxes on aviation, a catalyst of economic growth, flies in the face of basic economics. This double-inflation increase will damage UK growth and drive down UK air passenger numbers when we need to stimulate the economy. APD is a tax on tourism and a tax on business travel.  The Chancellor said today that he wants to support British companies and not tax them out of business or the global economy but his actions on flight taxes do not match his words. The Chancellor’s decision is bad for jobs, bad for growth and bad for passengers – ABTA will continue to lobby against these damaging tax hikes.”

The 10% increase will also coincide with the introduction of the Emissions Trading Scheme (ETS), which is expected to raise £2bn in taxes each year by 2015/16. ABTA will continue to lobby for the cost of ETS to be offset against APD.

The specifics of the changes to APD will be announced next Tuesday 6th December, following which ABTA will provide a more detailed update.

Air Passenger Duty paid by a family of four now and estimated amounts after double inflation increase

  2011 2011 2012 2012
  Economy Premium Economy Premium
Spain £48 £96 £53 £106
USA £240 £480 £264 £528
Caribbean £300 £600 £330 £660
Australia £340 £680 £374 £748

The ‘Fair Tax on Flying’ campaign, which is backed by an alliance of over 30 companies ranging from airlines, tour operators, destinations and travel trade associations, calls on the Government to make UK aviation tax fairer. For more information visit: http://www.facebook.com/afairtaxonflying